HDB and URA will extend the temporary relaxation of the occupancy cap for rentals of larger HDB flats and private residential properties for another two years. This is a positive move as it will benefit both tenants and landlords. These changes will enable tenants to share a unit with more people, reducing rental costs and optimising space usage. This relaxation of the occupancy cap is expected to benefit lower-income groups, students, blue-collar foreign workers, some Singaporeans, and big families.

1. Helping Singaporeans, especially big families and HDB upgraders

These changes will continue to support Singaporean families who need to rent temporarily. For instance, HDB upgraders who must first sell their flats before purchasing a private condominium to avoid incurring Additional Buyer’s Stamp Duty (ABSD), would therefore require interim rental housing. Larger families will also benefit, as they can remain under one roof instead of renting multiple units, helping to manage rental costs more effectively. In addition, this measure encourages multigenerational living, allowing families to stay together and better support elderly family members.

2. Higher rental returns for some landlords

Landlords can enjoy higher rental returns by leasing the unit to more people. This comes in timely as rental rates generally experienced minimal growth over the past year. In fact, the private rental rates have either dropped or stagnated after the post-pandemic high in some areas. The HDB rental market has also been experiencing slower rental growth over the past year. Moreover, maintenance costs, management fees and property taxes had risen in recent years. Hence the increased rents will help to defray some of these costs.

3. Retaining essential foreign workers

Allowing more people to share rental units can help reduce the cost of living. This will not only benefit these individuals but also help attract and retain foreign workers who are essential to supporting sectors such as manufacturing, nursing, service, and retail.

4. Greater rental market stability

Although more homes have been completed in recent years, population growth and resilient hiring of foreign workers and expats have kept rental demand firm. Therefore, increasing the occupancy per unit has the potential to mitigate demand pressures within the rental market. This can contribute towards a greater equilibrium between supply and demand and ensure better stabilisation of rental prices.

5. Optimisation of living spaces

Accommodating more individuals within a single residence can enhance space utilisation, especially in larger units like maisonettes, landed properties, and executive apartments that might be underutilised.

Challenges

More people living within the same unit may result in increased noise levels. There will also be more people sharing common facilities like lifts and condo amenities.